Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help with b and c Required information [The following information applies to the questions displayed below.) Flintstone Company is owned equally by Fred Stone

please help with b and c image text in transcribed
image text in transcribed
image text in transcribed
Required information [The following information applies to the questions displayed below.) Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom hold 2,100 shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 565 of her shares for $26,800 per share on December 31 of this year. Wilma's income tax basis in each share is $7,250. Flintstone has current E&P of $10,800,000 and accumulated E&P of $50,520,000. a. What is the amount and character (capital gain or dividend) recognized by Wilma as a result of the stock redemption, assuming only the "substantially disproportionate with respect to the shareholder" test is applied? Answer is complete and correct. Dividend $ 15,142,000 Required information [The following information applies to the questions displayed below.) Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom hold 2,100 shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 565 of her shares for $26,800 per share on December 31 of this year. Wilma's income tax basis in each share is $7,250. Flintstone has current E&P of $10,800,000 and accumulated E&P of $50,520,000. b. What is Wilma's income tax basis in the remaining 1,535 shares she owns in the company? Income tax basis in remaining shares Required information [The following information applies to the questions displayed below.) Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom hold 2,100 shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 565 of her shares for $26,800 per share on December 31 of this year. Wilma's income tax basis in each share is $7,250. Flintstone has current E&P of $10,800,000 and accumulated E&P of $50,520,000. C. Assuming the company did not make any dividend distributions this year, by what amount does Flintstone reduce its E&P as a result of the redemption? Reduction in E&P

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Auditing In Plain English A Simple Guide To Super Effective ISO Audits

Authors: Craig Cochran

1st Edition

1932828168, 978-1932828160

More Books

Students also viewed these Accounting questions

Question

Customers have to repeat information they have already provided.

Answered: 1 week ago